Ask a person what is the single most important thing that
could happen to improve his or her financial picture and
the answer you'll get the answer—in various
gradations—a sudden influx of cash. Some of us wish
for pay raises, others want to win the lottery, and more
indecisive types just dream of a sudden windfall of cash.
Take an average family in an average neighborhood in a
small town that's earning, all together, about $60,000.
Chances are that family is wishing for more money. They
probably even have an amount in mind. If only, they will
whine, we could earn $70,000, we'd have it made! Even
$68,500 would be enough! That would be all it would take
for us to be well off.
Meanwhile right down the road is another family in the same
general circumstances, and they're also moaning about not
having enough money. The thing is, this second family
already earns $70,000. But it's not enough. They need
$80,000, maybe even $85,000.
Whatever you earn, if you're strapped for cash right now,
chances are pretty good that some people in very similar
circumstances are doing just fine with the same amount (or
less than) you're earning.
And whatever sum you're dreaming about ... wake up! There's
somebody out there that fell into that much money and is
now flirting with bankruptcy.
It's just as easy (maybe even easier) to go broke earning
$100,000 a month as it is to go broke earning $4,000 a
month.
If you're a typical American you probably wonder: how on
earth can you go bankrupt if you bring in $100,000 a month?
That's over a million a year!! How can you be anything but
rich?
It is not hard to go broke. Here's how. Spend $101,000 a
month. Believe me, that extra $1,000 can really sneak in
unnoticed when the income shoots up. That's why so many
lottery winners and movie stars and the "silly rich" end up
bankrupt. When you only bring in $4,000 a month, it's
pretty hard to "make a mistake" and spend $5,000 since
you're probably counting your pennies.
Your financial health is made up of two things. Americans
fixate on one and ignore the other.
Part of your overall financial picture is your income.
That's true. I don't want to underestimate it. Your income
is vitally important. And don't get me wrong—more is
better when it comes to income.
But the other part of your overall financial picture is
what you spend. This is where many of us go wrong.
We act like we have control over our income because we
fixate on income. The truth is, you don't have much control
over your income.
Let's say you have a job. You really don't have much
control of what kind of raise you'll get. You can do a good
job, but if the industry suffers a downturn or your boss
doesn't like you or you make some career mistakes, you may
not even get any raise. The old adage that hard work will
bring you rewards really didn't mean that working hard for
a corporation guarantees you regular and significant
raises. You may not get them.
You might think you could just find another job. That's
true. But the kind of job you can get depends a lot on your
education, skill set, and background as well as where you
live and the competition to nab those elusively rare
high-paying jobs.
Let's face it, at some point, you max out. Even if you're a
world-famous brain surgeon working at a world-famous brain
surgery hospital, you may be already at the top of your
game. You can't walk out and figure you'll work somewhere
else, because there may not be a "somewhere else" for you.
On a smaller scale that is where many of us find ourselves.
We earn decent pay and it is unlikely we are going to be
able to do much better somewhere else (if there even is a
"somewhere else").
But you do have a lot of control over what you spend.
Some people are mystified by that. They see debts and
expenditures as things that "just happen."
It's true that you have to pay rent, buy food, and pay your
taxes, but you have some control over the first two items.
When it comes to entertainment, clothing, and vacations,
you have a lot of control!
However, many people struggling with debt act like
discretionary spending cannot be controlled.
A family in five-figure debt took an expensive vacation one
year and ended up getting dunned by collection agencies
because they let some of their already festering debt fall
into worse arrears than previously. When I asked them why
they went on an expensive vacation that year, they seemed
stunned.
"It was summer. We always go on vacation."
I recently overheard a woman discussing which hotel she was
going to stay at during her upcoming vacation. Then she ran
into her landlord. She was two months late with her rent!
Somehow, she never made the connection between spending on
a vacation and being late with her rent.
Expenditures relating to discretionary things (vacation,
entertainment, amusement, eating out, travel, clothing,
jewelry, costmetics, and so on) is controllable.
Most people can trim a budget by 10% easily, without
feeling a pinch. Most of us can save even more by making
conscious decisions and adjustments. And it's possible for
zealots to cut expenses radically without giving up a
decent lifestyle.
If you cut your expenses by 20% (a good target, by the
way), that's like getting a 20% raise. You can't reasonably
expect your company to give you a 20% raise, but you can
give one to yourself!
What's more, frugality is not necessarily a program of
hideous deprivation and austerity. It can be creative,
engaging, and fun. It forces you to do things differently,
and that can give you some pretty amazing insights.
Here's what I mean. You may feel like your life is out of
control and you dream that a bigger income would "fix
things." But then you decide to start saving money. You
give up cable TV and going to the movies. This forces you
and your family to interact a bit more. You start playing
ball in the park after work or board games at night.
I've heard of restaurants-only couples who went on
frugality plans who discovered that cooking at home was not
only fun, it was healthier. The couple loses weight, finds
a hobby they both can enjoy, and learns (here's a surprise)
that it's really no more time consuming to cook regularly
than to eat out.
Money-saving strategies may encourage you to take up
sewing, start a garden, or bake your own bread ... and many
people are amazed to find they enjoy these things.
Not only that, frugality is a good incentive to proper
work-life balance. Most of us get into the debt whirlwind
because we're living too much in the work zone. (Work is
expensive! It requires gas, clothing, day care, and all
sorts of special services to permit us to log those long
hours.) Frugality is going to force you to spend more time
at the home front.
And when it saves you money, you realize you not only can
afford to spend more time at home with the family, you
can't afford not to.
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Stop worrying about your income and control your out-go.
Get the facts at http://www.MyDebtConsolidationAnswers.com .
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